More Consumers Shop Around for Credit Cards for Bad Credit
View PDF | Print View
by: barrywaters
Total views: 90
Word Count: 517
Consumers are still spinning from the economic events of the last year and the impact on the credit industry. Lending institutions have adopted much tighter lending requirements and are, consequently, turning away those consumers who appear to pose a higher financial risk. Borrowers seeking credit cards for bad credit are finding it more difficult to open accounts. Better credit reports and scores are necessary to qualify for many new credit accounts. Long standing customers are not immune to the new credit standards either, as many have experienced an increase in rates and fees or had their lines of credit lowered. According to a Federal Reserve study, an estimated 45 percent of banks lowered maximum limits on the credit cards of existing customers in the last quarter of 2008. American Express is currently incenting some customers it perceives as risky to pay off their balances and cancel their accounts in exchange for cash. For its customers who carry large outstanding balances, Chase raised the required minimum payment from 2 to 5 percent. Citigroup says it is decreasing credit limits to due to the current state of the economy. Some consumers who have had their credit lines decreased now carry a larger debt relative to their available credit, which has adversely affected their credit scores. Others are simply struggling to make payments or defaulting on them, as they prioritize which bills get paid in the current economic pinch. More consumers, consequently, have had to look for credit cards for bad credit.
Credit cards help build credit scores and credit histories. And you cannot get more credit, unless you have some credit history. Most consumers who are seeking credit cards for bad credit know how vital good credit is. Many of them have no choice but to rely on credit cards that charge more fees and larger interest rates. If consumers keep the hefty rate and fee credit card accounts in good standing, it can help their credit histories. More often than not, however, the high charges accumulated on the cards too easily allow the consumer to fall back into debt. A better option is a prepaid card, which offers all the convenience of a card. You put money on the card and can buy things with the card until the balance runs out. A prepaid card will not, however, help you build your credit. In lieu of opening new credit cards for bad credit, most financial advisors recommend that consumers pay off debts on their current cards and maintain the longest standing card. Accounts with a good status that you have had for a long time reflect positively on your credit score. Maintaining the history of your longest standing account and utilizing prepaid cards can empower you to build a better credit report and score. Eventually, you will no longer have to seek credit cards for bad credit and can, instead, qualify for traditional cards with low rates and fees.
Related articles Credit cards | Credit cards |
About the Author
More related to credit card applications, see www.getsmart.com/credit-cards.
Rating: Not yet rated